Unicorns’ stock cools in slow IPO market

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Valuations of the stock of once-hot start-ups are stalling, and it's starting to look a lot easier to acquire private companies' shares at a time when IPOs are slowing.

Stock in start-ups has proved enticing to hedge funds, sovereign wealth funds and other investors, some of which bought into companies like Facebook before its initial public offering. The investors turned to private markets in the years that followed Facebook's IPO to try their hand backing a bigger portfolio of start-ups.

But investors in companies, including home dinner kit maker Blue Apron and human resources software supplier Zenefits, have marked their stakes down, reflecting equity losses, according to recent public filings. Both companies had raised funds at "unicorn" levels, meaning $1 billion or more.

Now, some investors are selling shares in privately held companies in order to shore up liquidity.

"You're seeing hedge funds starting to pull out," said Michael Moe, chief investment officer of GSV Capital, a public investment fund that buys into start-ups. "Hedge funds rushed into private markets looking to [profit]."